Corporations, Charter Rights, and Cruelty

March 7, 2021

By Brian Babcock

A corporation may be treated like a natural being for many purposes in the law, but not when it attempts to claim the protection of the prohibition against “cruel and unusual punishment” in the Canadian Charter of Rights and Freedoms.

The issue was decided by the Supreme Court of Canada in Quebec (Attorney General) v. 9147-0732 Québec inc. In that case, the corporation was convicted under a provincial statute for carrying on a business without a license. The Charter issue arose because the law created a minimum fine in excess of $30,000.00. The corporation argued that this was “cruel and unusual”  because it might make the small business insolvent.

In recent years, there has been a trend toward both mandatory minimum fines and maximum fines under various provincial and federal laws. Some penalties are calculated based upon the number of days a violation continues – this can escalate amounts quickly.

Corporations can claim protection under certain, but not all, Charter rights. However, as with any person claiming Charter rights, it must show that it has an interest falling within the scope of the rights that are guaranteed by the particular provision.

In a unanimous decision which however generated multiple sets of reasons, the Court determined that “cruel and unusual punishment” is different from freedom of expression or freedom of religion, and that only a natural person or human being may experience cruelty or the sort of punishment protected by the Charter.

In the Sunday closing case in 1985,  corporations were found to be entitled to protection under the provision protecting that right. This was done by sidestepping the simple fact that corporations cannot have religious beliefs, and finding that a law infringing religious beliefs generally was unconstitutional, and thus had no force against anybody, including corporations.

However in the recent case, the Court ruled that fines against corporations are not linked to human dignity, which is the interest protected by the Charter prohibition on cruel or unusual punishment. Corporations cannot experience human reactions such as stress, anxiety, or suffering. This is similar to cases in which it was found that corporations cannot have a Charter right to “life, liberty and security of the person” or not to be compelled as a witness.

Although this analysis makes some sense, it is noteworthy that the Court of Appeal felt that corporations were deserving of this protection. Without it, governments may arbitrarily escalate minimum fines, which often penalize a small “mom and pop” business as harshly as a multinational organization. The owners of that small business may certainly feel stress, anxiety, and suffering. The Supreme Court however specifically determined that even if the punishment affects the humans behind the corporation, the choice to use a corporate form of business comes with disadvantages as well as benefits.

Although we never encourage clients to break the law, we also recognize that technical violations of laws, particularly regulatory provisions, do happen. A “one size fits all” minimum fine might be politically popular, administratively simple, and a good source of revenue. It is, however, a disincentive to doing business.

We hope that the Ontario government continues to walk the walk and not just talk the talk on being “open for business”.

The bottom line is that your corporation needs to be aware that:

  • Charter protections are of limited application to your corporation;
  • minor breaches can lead to major fines;
  • breaches ought to be avoided as a result;
  • if it is charged, you may wish to defend on the merits even in a tough case;
  • any negative impact on you personally will not affect the fines against a corporation.

Weilers has expertise in defending against many statutory offences typically targeting corporations, officers, and directors, particularly in the areas of employment law, worker safety, environmental law, and bylaw prosecutions.